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Devon Touts Bone Spring IP24s of 10,000 BOEPD in Q1; Adds Rigs in Eagle Ford, PRB

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Devon Energy reported its Q1 2019 results. Highlights are below.

Highlights:

• Five "Prolific" Bone Spring Wells: These wells averaged initial 24-hour production rates in excess of 10,000 BOEPD, of which approximately 80% oil.

• Added third rig to Eagle Ford program

• Increasing Powder River activity - four rigs / dedicated frac crew

Delaware Basin "Cat Scratch Fever" Wells Impress - 10,000 BOEPD IP24s

First-quarter operating results in the Delaware were highlighted by five prolific Cat Scratch Fever wells targeting a second Bone Spring interval in southwest Lea County, New Mexico.

These wells averaged initial 24-hour production rates in excess of 10,000 Boe per day per well, of which approximately 80% oil.

Powder River Highlights

Latest well results:

STACK Highlights

Q1 Production Down -25% YOY Due to Asset Sales; Strong Light Oil, Delaware Output Growth

Q1 Production: Net production for retained U.S. assets averaged 308,000 BOEPD, exceeding midpoint guidance by 27,000 BOEPD - this is down -25% YOY from 413,000 BOEPD in Q1 2018 (due to asset sales - Non-core Delaware / Barnett)

• Of this total, oil and liquids production accounted for nearly 70% of total volumes.

First-quarter production was highlighted by results from Devon’s retained U.S. oil business. Light-oil production from these assets averaged 138,000 barrels per day - up +24% YOY. This result exceeded the high-end of guidance by 8,000 barrels per day.

The strongest asset-level performance during the first quarter was from the company’s Delaware Basin properties that delivered prolific growth in high-margin production. Net production increased 76% YOY, with total volumes in the Delaware to 107,000 BOEPD.

Raising 2019 Light-Oil Production Outlook

Based on the strong year-to-date results, Devon is raising the oil production outlook for its retained U.S. business in 2019. The midpoint of the company’s full-year guidance now represents an estimated oil growth rate of 17% compared to 2018, up from the previous guidance of 15%.

Capital Spending Below Q1 Guidance; No Change to 2019 Outlook

In addition to the strong production performance, the company maintained discipline with its capital program. Devon’s upstream capital spending for its retained U.S. oil business was $457 million in the first quarter, which was $43 million, or 9 percent below the company’s midpoint guidance. This level of capital investment represents 24 percent of Devon’s 2019 upstream budget.

For the full-year 2019, Devon has made no modifications to its capital outlook and expects upstream capital spending for retained assets to range between $1.8 billion and $2.0 billion.